The system for intraday trading on Forex “Linear Regression Breakout”
Linear Regression Breakout” system is designed for intraday trading at Forex market. It means working on small timeframes. Here we will consider trading on the basis of fifteen-minute charts. The system is perfect for major currency pairs, indices and commoditis. Forex brokers with a CB license will ensure reliable trading of indices and commodities. For intraday trading, the most volatile time is usually chosen, i.e. during the London session and at the beginning of the American session.
The basis of the system is the linear regression channel breakthrough indicator “Linear Regression Breakout”, created for the Metatrader terminal. This indicator is shown on the chart as two blue lines drawn on the minimum and maximum. Breakthrough points show yellow and pink arrows. As additional filters, the system uses indicators “PET-D” (Primo Early Trend Detector) and “Schaff Plot”. The indicator “PET-D” colored candles in green or red, depending on the direction of the trend. The “Schaff Plot” indicator is displayed in a separate window at the bottom of the terminal and shows the trend in color and direction of the line movement. The secondary indicator “ADR” serves as a guideline for determining the level of the profit. Indicators and the system template can be downloaded from the link at the bottom of the article. Below are examples of how to work with the “Linear Regression Breakout” system. The buy signal is usually expected in a descending channel, while the sell signal is expected in case of a breakthrough of the ascending linear regression channel.
Here, the Buy position opens after a break-up of the downstream channel, as indicated by the yellow arrow. At the same time, the indicator “PET-D” colored the candlestick green, and the line of the indicator “Schaff Plot” also became green. The stop loss level in this system is indicated by a red cross at the end of the lower channel line. A buy position is closed if a red candle or a red arrow appears. If after closing by red candlestick the prices remain within the channel, you can buy again by green candlestick.
The sell position opens after a breakthrough down the ascending channel, as indicated by the red arrow. At the same time, the indicator “PET-D” colored the candlestick red, and the line of the indicator “Schaff Plot” also became red. The stop loss level is indicated by a red cross at the end of the upper channel line. The sale position is closed if a green candle or yellow arrow appears. If after closing on a green candlestick the prices remain within the channel, you can resell on a red candlestick.
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